Tag Archives: Business

My thouhghts on Netflix

I have been speculating about the future of Netflix for the past couple months and I have been reasonably accurate.  I had predicted the fall of Netflix about 7 months ago but everyone kind of brushed me off.

Anyway, I don’t think they’re completely doomed just in need of a big change. In fact, when they decided to spin off their DVD business to Qwickster I was sure they were actively pursuing acquisition.  Now that they have closed Qwickster I am left confused and just curious if there is any strategy in place.    Anyway, let me explain my assessment.

Think about it this way.  Netflix was a pioneer and was surprisingly successful as a very small player in a huge market.  I don’t think Netflix purposefully targeted such a big industry, instead I think they were just jazzed about being innovative and forward thinking.   The fact that they offered a complete TV solution with DVD and streaming was a very attractive offering,.  When they broke the combo service apart I think they fundamentally undermined their own value proposition.

Regardless of their success their industry was/is attracting a lot of attention(as it should have). What they eventually found is that they’re were up against the likes of Google, Apple, Amazon, ABC, FOX, CBS, TimeWarner, Cox, etc.  You get the idea, it’s a big player industry!

Being in the ring with such big players presents a lot of problems.  First, Netflix doesn’t have the cash (~330m) to go toe-to-toe with any of these companies.  In an industry were demands are increasing and studios are hiking prices up this is a huge disadvantage.  Secondly, if Netflix stock price continues to drop they might attract the attention of the hawks.  As these big players charge ahead into streaming TV their will be a lot of cash to play with which might mean goodbye Netflix (acquisition).

Well, all of that being said that, the announcement that they are killing Qwickster seems to contradict my assessment.  On the other hand, dropping the Qwickster brand may have been a defensive move to avoid the hawks.  Who knows what will happen from here?

Being an innovator in the workplace

I had my regular meeting last week with my CTO to catch up and we ended up getting a little philosophical about my role at work.  We discussed many of the successes that I have had in the past and where he sees me contributing the most.

I am continuously trying to see new boundaries we can push through, what features we can sell or offer and how we can be innovative to increase revenue.  While this typically comes easy to me because of my extensive background in this industry it is not really a repeatable process by the rest of the team members that I work with.

As such, we discussed how I need to continue to test the boundaries for new opportunities while keeping an eye out for areas that can be easily executed on by the rest of the team.  I was told that I am on the frontier and my job is to find the easiest way for everyone else to have the success that I have.

We put together a simple model to represent this approach.

Please excuse how crude the diagram is.  Simply put as someone who discovers new channels of innovation at the company, the breadth of my reach is much wider than what can be executed day in and day out by the remainder of the team.  I am not saying anything negative about the rest of the team, it is just a matter of individual focus.

My job, as an innovator, is to test the boundaries of new ideas and figure out what is the best and most appropriate for the rest of the team.  This, of course, only applies to my area of focus, not the company at large.

If I expect everything I figure out to be adopted I will not be able to continue the search for new innovations.  Instead I will be stuck supporting the tasks/duties that I have introduced.  From this, I become a bottleneck and instead of innovating I actually become more stationary in my job (very stationary).

In conclusion, it is best for someone who is on the forefront of ideas to find out what is the most sustainable and repeatable in the organization.  Once it can be adopted and supported by the rest of the organization I can move on to discover a new idea.

Taking the free out of free market

America, the land of the free and the home of capitalism.  The center stage of countless rags to riches stories filled with tales of business, innovation and determination.  Perhaps even the only place in the world where “it’s just business” is truly a legitimate excuse.   However, today more than ever we see the government playing God in our formerly free market and I believe there is more at stake than just our pension fund.

Looking over the course of the last two years the American government has pumped billions and billions of dollars into the economy.  At first it didn’t seem to have much of a target, a simple blanket stimulus package for everyone.  However, in time the bailouts became very precisely targeted, specifically towards large companies that had failed on numerous different levels.  Companies that I think had hit their downward spiral well before the thought of this recession had entered anyone’s mind.

I have no problem with the government assisting the private sector but it has to be reasonable, logical and duly sanctioned.  The bailouts need to accompany long term solutions with actionable plans for improvement, they should not be a final deathbed revival effort.  However, today it seems as though we continue to bailout terrible companies that have made terrible decisions.  Why are these companies afforded this opportunity; make poor products, follow poor strategy, overpay everyone….oh and by the way here’s a 10 billion dollar bailout just because your outdated and unmanageable company can’t cut it anymore.

If the government didn’t step in, terrible companies like Ford and Chrysler would have already gone under and been replaced by companies that are better, faster and smarter.  Perhaps these companies may have even been enlightened enough by their unassisted failure to reform their business.  Whatever the case may be we have to ask whether we are saving great companies or are we actually just protecting bad companies from their rapidly approaching demise?  If these companies couldn’t stabilize after decades of success and growth what makes us think that they are going to ever bounce back?

I know the mantra; we should buy American and be proud of American companies but what the hell happened to leading the way?  At what point did corporate America eat a giant slice of complacency and just say screw it?  Similar foreign companies are world recognized for strategy, operations management, efficiency and more.  Whereas American car companies are an international joke.  We pay our union employees 10 times  what foreign employees are paid and not only do we produce fewer cars, we produce cars that can’t ever rival their competition.

Let us not forget what the free market has brought us; high standards of excellence, innovation, competitive drive, talent abundance, rapid growth, strong development and most of all money.  The free market provided a life and death cycle for American businesses.  Once a company became old and incapable of fulfilling it’s duties it would ultimately be passed by a new company that was smarter and faster.  This cycle is the underlying force for American economic progress and it’s being disrupted by the government.

Could these bailouts ultimately be hurting us more than they are helping?  Are we debilitating our entrepreneurs and up-and-coming business by keeping these inefficient and costly behemoth’s around?  I think we’re just procrastinating the inevitable and that the delayed fall will be much bigger.

Damien
@DamienH